By the time the Terra blockchain was suspended for the second time in an attempt to save the failing ecosystem, the circulating supply of LUNA had risen to more than 6.5 trillion.
According to Terra Analytics, the supply of LUNA was only about 340,000 for the previous two weeks – up until only three days ago. That was until UST lost its dollar peg on Monday, putting LUNA, a similar token that was designed to prop up UST’s value, into a downhill slide.
LUNA sales were supposed to help UST maintain parity with the US dollar, according to the algorithmic stablecoin’s design. The mechanism put a lot of downward pressure on LUNA once UST lost its peg and investors rushed to cash out en masse. Worse, the more LUNA’s price dropped, the more downward pressure there was. This kicked off a vicious cycle in which LUNA’s price plummeted and supply grew at an exponential rate.
The network released 40 million LUNA tokens on Tuesday. Its circulating supply began to rise on Wednesday, reaching 1.5 billion tokens. Despite the chain being paused for a short time on Thursday, this reached a new high of 176 billion tokens. It has now reached 6.5 trillion and is still increasing if the chain had not been halted for the second time.
Developers working on Terra eventually called it a day and chose to freeze the blockchain early Friday morning until they figure out a method to resurrect the project after the supply increased roughly 17,000 times in only three days.
“The Terra blockchain has officially halted at block 7607789. Terra Validators have halted the network to come up with a plan to reconstitute it. More updates to come,” said Terraform Labs on Twitter.
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